As stores move towards a more cash-free existence, some states are still requiring the acceptance of cash. According to Axios, one solution to keeping both merchants and consumers satisfied is introducing a “reverse ATM,” where consumers feed cash into a machine and get a prepaid card back for use in-store.
Reverse ATMs have already been installed in many venues, such as amusement parks, sports stadiums, and casinos. The machines need to be fast and easy to use—particularly at venues where people have a defined period of time, including movie theaters or ballgames.
While physical cards are currently being used, reverse ATMs could evolve to load a digital wallet.
Typically, reverse ATM machines don’t charge fees for converting the cash. However, some cards carry dormancy fees of around 4% if the card isn’t used for three months, and the merchant pays an interchange fee charged by Visa and Mastercard, just like other cards.
We’ve seen more businesses move away from accepting cash over the past few years, and that can be attributed to a few factors. Firstly, handling cash can be a hassle for retailers, with problems including theft and frequent trips to the bank. Secondly, the pandemic accelerated the shift towards electronic payments, as consumers became more hesitant to handle physical money due to the potential transmission of the virus. Finally, some companies are opting for cashless transactions to streamline their operations and reduce costs associated with handling cash.
But, going purely cashless won’t be the endgame for these businesses. Many consumers are considered unbanked, meaning they don’t have access to credit cards or have a bank account. And major cities, including New York, Washington D.C., San Francisco, and Philadelphia, have enforced a mandatory acceptance of cash by merchants. This policy is mainly implemented to protect consumers who don’t have access to credit or debit cards from possible negative consequences.
Because many of the most vulnerable consumers are unbanked, but have a mobile device, there is a growing movement towards digital payments that don’t require a traditional bank account or credit card. Mobile payment apps are becoming increasingly popular, allowing consumers to transfer money and make payments using their smartphones.